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DECISION No

DECISION No.984-TTg OF DECEMBER 30, 1996 OF THE PRIME MINISTER ON A NUMBER OF UNDERTAKINGS AND MEASURES FOR CONDUCTING THE 1997 PLAN FOR SOCIO-ECONOMIC DEVELOPMENT AND DRAFT STATE BUDGET

With a view to well implementing the tasks for 1997 approved by the 10th session of the IXth National Assembly, the Prime Minister hereby decides a number of undertakings and measures directing the implementation of the 1997 plan for socio-economic development and draft State Budget in a number of key areas:

I. IN MOBILIZING, UTILIZING AND MANAGING CAPITAL RESOURCES FOR DEVELOPMENT INVESTMENT

It is necessary to modify, supplement and adopt a number of new mechanisms and policies in order to develop effectively and use efficiently all potentials in labor, capital and resources in service of socio-economic development, focusing on the following issues:

1. To recommend to the Standing Committee of the National Assembly to amend the Ordinance on Labor Obligation in response to the requirements of the new situation, ensuring that all citizens within the age of labor duty (except for those exempted from it) will contribute a certain number of days a year to the building and repair of infrastructure projects. To issue a regulation on the labor duty period equivalent to the period of military service duty for young men who are within the age of military service but who are not drafted into the army, chiefly for them to contribute to the construction of a number of major projects in infrastructure. Those who are under the labor duty but who do not discharge it directly shall be required to pay an amount of money equivalent to the market cost of labor in their localities. The Government shall elaborate detailed provisions on the mode of mobilization, management and utilization of popular labor in terms of actual labor or money so as to ensure equity and efficiency and avoid carelessness and waste. To take measures to mobilize other resources to build public works in order to meet the needs of socio-economic development of the country.

2. To go for stepped-up engagement of communities in the fields of education, health, culture, sports, etc., and, at the same time, to diversify the investment resources to develop the following fields:

a) To issue policies encouraging the development in many forms of semi-public and people-founded establishments in education and health, in which attention is to be paid to the necessary conditions for the emergence and operation of these establishments, such as policies for leasing material bases (land, school places, etc.), lending capital, social insurance and other benefits for teachers, physicians and workers in these establishments. To draft the regulations for the foundation and operation of the joint-venture hospitals and hospitals with 100% foreign investment. To make regulations on the mechanisms for management and control by State agencies over the operation of semi-public, people-founded and foreign-invested units in education and health.

To renew the mechanism for ensuring budget provision for the public schools and hospitals along the line of step by step meeting their financial requirements, first of all the requirements of regular spending which includes a satisfactory salary for teachers and physicians, through incomes from tuition and hospital fees officially set and openly publicized and, at the same time, to impose a thorough ban on all revenues outside the provision of the regulations. At the same time, to set clear regimes and modes for the provision of assistance in education and medical treatment for the poor and families of policy entitlement through contributions from the State Budget and donations from organizations and individual citizens. To renew the mechanism of health insurance. The Government shall regulate issues of principle nature and guide local administrations in applying the new mechanisms within appropriate scopes; and through practical applications to draw experience for prompt perfection of the new mechanism and its wider application.

b) The cultural, sports and physical culture branches should take the initiative to study various forms of socialization applicable to various types of activity and increase their income-generating activities so as to cover part of their operation costs.

In the field of sports and physical culture in particular, to launch a strong popular movement to develop this branch, encouraging the formation of clubs for each sport which are to operate on voluntary financial contributions from the members and some assistance from the State. At the same time, to make full use of the financial assistance or long-term sponsorship by large domestic manufacturers and businesses as well as foreign investors in Vietnam.

3. To make specific supplements to policies encouraging domestic investment along with settling problems related to the formation and operation of businesses of all forms so as to tap the development investment potentials of all economic sectors, orienting them strongly to domains and areas of high priority and export production. To put forth regulations for coordination between State agencies and economic organizations and professional leagues and associations in guiding and assisting households and businesses, first of all in the fields of economic information and marketing, capital and application of new technologies.

To issue a regulation on BOT (Build-Operate-Transfer) and other similar forms for domestic investment; to effect the mechanism of using land rents for building infrastructure projects on the basis of re-allocation of land and simplification of administrative procedures for licensing the land-use right or renting land.

To continue issuing project bonds for a number of investment projects with capital retrievability, focusing first of all on the production of electricity and cement and the building of transport projects.

4. To implement Decree No.59-CP of October 3, 1996 of the Government on the Regulation on financial management and business accounting for State enterprises; in the course of this implementation, to modify and supplement promptly the provisions which do not entirely fit in with the practical situation. To pay attention to supervising the implementation of the provisions on cost accounting and the distribution of after-tax profits with a view to averting waste and corruption and increasing accumulation and development investment by State enterprises.

Fully to re-evaluate the value of fixed assets in the State enterprises, including the value of the land-use right over the land plots allocated to them; to allow them to apply fast-track capital depreciation to pay back the borrowed capital they have invested in renewing their technologies and equipment. To take measures to solve the problems of capital for enterprises which have the capability for high and efficient development.

To solve problems to accelerate the pace of equitization of State enterprises which have been selected and prepare for the next steps.

To step up the re-organization of enterprises which have been streamlined but which continue to make losses; to select for trial auction a number of small enterprises not in the essential areas.

5. To develop various forms for attracting medium- and long-term capital and use part of the short-term credit to an acceptable extent for medium- and long-term lending. The State shall subsidize partly the interest rate borne by the banks in their mobilization to increase their credit for investment. To broaden the issuance of Treasury bill, Government, project and bank bonds and the forms of insurance.

To regulate the interest rate in accordance with the inflation rate, gradually reducing the difference of lending interest rates for rural and urban areas and of transactions in Vietnamese and foreign currencies. To improve the mechanism of mandatory reserve; to form an insurance fund for money deposits, and integrate credit insurance into the operations of the State insurance companies.

To continue applying the policy of regulating interest rates properly in the light of demand and supply so as to encourage exports and control imports. To restrain and closely control imports on deferred payment; step by step to improve the balance of trade and international payment. To revise the regimes of managing foreign exchanges; clearly to determine the scope of payments not to be made in foreign exchanges and domestic lending. To build organizations and regulations for the management of all foreign loans and debts.

The State Bank shall take measures to make healthy the credit operations and actively to recover all due debts, reduce the percentage of overdue debts, inspect and handle all cases of banking personnel violating credit regulations for personal profits.

6. To increase the efficiency of investment credits of the State; for the investment projects of priority, apart from lending on preferential terms for project implementation (first priority), there should be pilot cases of financing on the basis of practical results after the projects have been implemented with financing from other sources (secondary priority) in order to ensure the efficiency of the investment.

With regard to infrastructure projects which are implemented on foreign loans and capable of capital recovery and which have been using budget capital as their counterpart capital, they shall now be shifted to taking State credit and pay it back with their collected fees.

7. To revise and make additions to the list of projects calling for ODA and FDI investment in line with the development plans of each branch and region within the strategy of industrialization and modernization and strong export orientation, increasing the competitiveness of domestic products and the economy as a whole. To perfect the mechanism for management and allocation of ODA capital, effect the newly-amended Law on Foreign Investment, overcome subjective and objective obstacles to the disbursement of pledged ODA capital, and increase the disbursement rate of FDI capital.

8. The plan for investment in capital construction of each Ministry, branch and local administration must reflect fully the capital sources allocated and controlled by the State, which include budget capital and investment credit allocated by the State, the self-invested capital of the State enterprises (from the capital depreciation fund, after-tax profit, project bonds and public shares) and the capital of the FDI projects of all forms. The heads of the branches and administration levels are responsible for strictly managing and economically and efficiently using the investment capital from the State budget and State credits; controlling and assisting State enterprises and foreign companies in their development investment; and guiding and creating favorable conditions for development investment by all other economic sectors.

9. The recording of the plan for capital and the provision and clearance of capital for State-invested projects shall be implemented on the principles and conditions specified in Decree No.42-CP, with some of its provisions now supplemented as follows:

a) With regard to projects in Group C, the Ministries and branches at the central level, the People�s Committees of the provinces and cities directly under the Central Government, the corporations established under Decision No.91-TTg (hereafter referred to as Corporations 91) shall register them in time and only once in the first quarter of 1997. If they do not register their plans as required, they shall not be informed of the plan for capital. The allocation of capital by enterprises in Group C must ensure that over 60% of the capital be allocated to the projects and project items to be completed within the year.

b) The projects of Groups A and B which have been entered into plans shall be informed of the plan for investment capital from the beginning of the year and provisionally allocated their assigned capital right in January 1997.

c) Proportionally to the progress of the construction as approved of the projects allocated with budget capital, the financial agencies shall improve their procedures and formalities with a view to ensuring the provision and clearance of capital for capital construction in line with the pace of construction and avoiding prolonged delays in the clearance of investment capital already allotted to projects included in the plan for 1997.

d) All requests for rearrangement, supplement and changes to the structure of investment capital shall only be considered for solution on two occasions, in June and October 1997.

10. To organize well the implementation of Decision No.531-TTg of the Prime Minister on the management of national programs. To start evaluating and approving those national programs which have not been processed through procedures specified in Decision No.531-TTg. In the implementation of the approved programs, the People�s Committees of the provinces and cities directly under the Central Government shall take the initiative to integrate the national programs in their localities on the principle that they will carry out with the highest effectiveness the goals of each program. The capital for capital construction (including the State-assigned capital of capital construction nature) of the programs must be managed in accordance with the Regulation for Investment and Construction Management issued in conjunction with Decree No.42-CP.

II. ON BUDGET MANAGEMENT

1. To carry out synchronously measures for management of revenues with a view to ensuring right and full collection of revenue as provided by law, and strive to fulfill and over-fulfill the projected targets of budget revenue approved by the National Assembly:

a) The Ministries and localities shall concentrate on solving problems for enterprises so as to help them boost production and product sales and increase their business efficiency; and on that basis, to increase revenues of the State Budget.

b) The tax and customs agencies shall improve their managerial methods for revenue and increase the power of the agencies tasked to collect taxes, fees and dues; to closely coordinate with the local administrations in strengthening inspection work against revenue losses, especially in areas where such losses are existing and which have potentials for increased revenue such as import-export, non-State economic units, foreign-invested enterprises and real estate; to handle all uncollected revenues in line with the directive of the Prime Minister; to publicize the tax rate levied on each production and business household and promote the voluntariness in tax payment by units.

c) The bonuses for localities for over-fulfilling plans for collection of import and export and special consumption taxes and their efforts to fight against tax evasion and illicit trade:

- For the imports and exports across land border, the localities shall be entitled to 100% of the taxes collected in excess of their State-assigned plans for import, export and special consumption taxes.

- For special consumption taxes collected on domestic goods and for import, export and special consumption taxes collected on goods imported through sea and air routes, the localities shall be entitled to a percentage of the amount in excess of their assigned tax collection plans.

- The above-mentioned bonuses shall be used only for investment in the construction of infrastructure projects.

2. Budget expenditures must be made economically and efficiently. If the localities fail to collect revenues as planned, they shall have to cut their expenditures correspondingly; no expenditures shall be allocated when no revenues are made; and all amendments and supplements or new policies which entail increased expenditures within the year shall be made only when revenues are ensured.

The financial agency shall ensure the regular provision of the year�s budget as planned and proportionally with the work progress (including the provision of additional budgets for the lower levels as planned). In case the flow of revenues fails to meet in time expenditure requirements, the Ministry of Finance shall advance allocations from the capital of the State Bank to ensure the planned pace of expenditures of the Ministries, branches and localities and shall repay the allocations within the year. The allocations which are already specified in the expenditure plan and ensured with revenues must be made in a timely manner and not be cut without authorization.

3. To encourage the localities to procure their own capital for investment in infrastructure from the following sources:

a) Revenues from the licensing of the land-use right and land rents, including land rents made by foreign-invested enterprises (except for land rents collected from oil prospecting and extraction operations) shall be used wholly by localities for infrastructure construction.

b) Revenues made from selling housing owned by the State shall be used wholly by localities for investment in their housing development funds and construction of infrastructure projects for their residential areas.

c) Revenue from construction lottery: provinces which make no more than 20 billion VND are allowed to use it wholly; those which make more than 20 billion VND shall also be allowed to use an additional 50% of the amount in excess to invest in the construction of public welfare works such as hospitals and schools.

d) Taxes on use of rice-paddy land shall be used at 50% by localities (100% by the provinces in mountain areas) to invest in agriculture and restructuring the rural economy.

e) Taxes on forest resources, including revenues from sales of planted trees (if any), shall be used to invest in forest planting and protection and infrastructure construction.

4. Revenues from fines against violations of traffic rules, and fines and confiscation of goods from illicit trade shall be included wholly into the budgets of the localities; the localities are allowed to spend 70% of this amount on expenditures for the personnel operating in their areas (including the police, transport and communication, customs and market management services). The expenditure to be made by the Ministries and agencies at the central level to undertake their assigned functions shall be included in their regular budget allocations.

5. To carry out seriously and efficiently the policy of economical budget expenditures with the following measures:

a) The Ministry of Finance shall coordinate with the concerned agencies to study and issue norms, criteria and standards for expenditure in accordance with the capacity of the State Budget and the specialized characters of each administrative and public service unit; to submit to the Government for approval the criteria for use of government-issued cars by each level.

b) To restrain State-budget spending on construction of new office buildings and purchase of government-issued cars by administrative and public service agencies and agencies of the Party and people�s organizations. All agencies are to make proper use of their assigned office space and facilities for their work. In case such an expenditure is urgently needed, the Prime Minister shall authorize the Minister of Planning and Investment to issue the authorization for the building of new office space, and the Minister of Finance to issue the authorization of the purchase of new cars, after strictly examining the needs and the financial resources for such construction and purchase; every quarter, these two Ministers shall have to report to the Prime Minister the results of their handling of these expenditures. The expenditures on the building of office space and the purchase of government-issued cars must comply with the regime for financial management and be included in the assigned budget plans.

c) The Government Commission for Organization and Personnel must review the payrolls and salary funds of the Ministries, branches and localities and take measures to handle the cases of inflated payrolls and improper salary funds which result in increased budget expenditure.

d) The agencies which are drawing their fund from the State Budget have to adopt concrete practical programs to effect policies for economical practices against waste; to be strictly economical in spending on conferences and festivities. The Ministry of Finance shall monitor and report to the Prime Minister the situation of expenditures on conferences and festivities of the agencies which are funded by the State Budget.

III. PLANNING MECHANISM

In order to ensure the initiative of the branches and localities in planning and raise their responsibility in directing and materializing their plans, the Government shall make a number of allocations needed for maintaining the key balances of the economy and ensure a harmonious development among different localities, branches and domains; and at the same time step up its monitor and control of the implementation of the plans. Of the units which are assigned with plans by the State, there will be in 1997 a number of additional State-owned corporations set up by Decision No.91-TTg.

A. State-planned norms assigned by the Prime Minister:

1. To Ministries and agencies at central level:

a) Investment in capital construction:

- The total investment funding for concentrated capital construction, including the capital for project implementation;

- The structure of capital for project implementation in a number of important branches and areas;

- The list of investment projects and the capital for them (including for construction and equipment) for projects and plans for Group A (which includes ODA projects with capital equivalent to that of domestically-financed projects in Group A).

b) Finance:

- To assign to Ministries and agencies at central level: The total budget expenditure and detailed expenditure items; including expenditures for national programs;

- To assign to the Ministry of Finance: The total revenues to the State Budget;

- To assign the General Department of Customs: The total revenues from export taxes and import taxes (including the taxes on special consumption levied on imports and not including additional collections, fees and dues).

c) Import and export (to be assigned to the Ministry of Trade): The total value of imports and exports.

d) National reserve:

- To assign to the National Department of Reserve: The duty of making the necessary reserve in rice paddy, rice, materials and essential equipment;

- To assign to the National Defense and Security Services and number of other branches: The duty to maintain a reserve of special supplies.

2. To assign the Corporations 91:

a) Investment in capital construction:

- The total investment in concentrated capital construction, including the capital for project implementation;

- The list of investment projects and the capital for them (including installation and equipment) for projects and plans of Group A.

b) The total expenditures to be covered by the State Budget.

3. To assign to the provinces and cities directly under the Central Government:

a) Finance:

- The total budget revenues in the locality; the special consumption tax on domestic goods; the import-export taxes and special consumption tax on imports through the land border;

- The total budget expenditure of the locality; which include expenditures on capital construction from the concentrated funding resources and investment expenditures from resources assigned to the locality;

- The percentages in the allocation of budget revenues for the central and local budgets (%);

- Additional allocations from the central budget (if any).

b) Investment in capital construction:

- The total investment for concentrated capital construction, including the capital for project implementation;

- The structure of the capital for project implementation for a number of important branches and areas;

- The list of investment projects of Group A and the capital for them.

B. THE PRIME MINISTER MANDATES:

1. The Minister of Planning and Investment: On the basis of the plans and tasks of socio-economic development in 1997 which has been approved and assigned by the National Assembly and the Government, to assign to the Ministries, branches and localities the norms for concretizing the Government-assigned targets, and create conditions for the Ministries, localities and units to implement in compliance with the orientations and targets of the State plan.

In investment in capital construction, the Prime Minister mandates the Minister of Planning and Investment to assign the list of investment projects (including installation and equipment) of Group B and the capital to implement them, the capital for planning work, preparation of investment and for project implementation; to announce the lists of projects of Groups A and B of the central level in the locality, and the planned investment credit (after the Prime Minister has decided the total credit investment, the related subjects and the lending interest rates).

The Ministry of Planning and Investment shall provide guidance for the realization of the production and business of the main products of each Corporation 91 (commercial electricity, coal, crude oil, natural gas, steel, urea, cement, paper, sugar, coffee, food circulation, etc.); to announce the planned investment credits.

2. The Minister of Finance is mandated to assign plans for budget revenues and expenditures for the central-level agencies which are not included in the list of Ministries and agencies to be assigned directly by the Prime Minister; and the same time, to guide the Ministries, localities and Corporations 91 in the norms for budget revenues and expenditures with a view to ensuring the implementation of the State Budget already approved by the National Assembly and assigned by the Prime Minister; to announce the expenditures from the State Budget to be made in the localities for coordination in monitoring and controlling their implementation.

C. ON THE IMPLEMENTATION AND CONDUCT OF THE PLANS:

1. On the basis of the decisions and measures for conducting the implementation of the socio-economic development plan and the State Budget plan approved by the Prime Minister, the Ministries, branches, provinces and cities directly under the Government shall concretize and guide the implementation of the plans on issues within the jurisdiction of the Ministries, branches and localities so as to ensure a uniform implementation throughout the country.

2. In line with the managing procedure of the Government, the Ministries, localities and Corporations 91 shall make monthly reports on the progress of their implementation of the plans in a number of key areas such as production, capital construction, budget revenues-expenditures, money, import and export, materials and goods circulation, inflation, etc., and send them to the Office of the Government, the Ministry of Planning and Investment, the Ministry of Finance and the General Statistical Office on the 25th of each month at the latest.

3. To effect the regime of monthly meetings among a number of offices, which shall be chaired by the Minister of Planning and Investment, to review the implementation of the plans so as to propose timely measures to solve newly-emerging problems, thus ensuring the successful implementation of the socio-economic development tasks set in the Resolution of the National Assembly.

For the Prime MinisterDeputy Prime Minister

PHAN VAN KHAI